Good day, ladies and gentlemen and welcome to the Fourth Quarter 2009 Portfolio Recovery Associates, Incorporated Earnings Conference Call. My name is Noelia and I will be your coordinator for today. At this time all participants are in a listen only mode. We will be facilitating a question-and-answer session towards the end of this conference. (Operator Instructions). As a reminder, this conference is being recorded for replay purposes.

I would now like to turn the presentation over to your host for today’s conference Mr. Jim Fike, Vice President of Finance and Accounting. Please proceed.

Jim Fike

Good afternoon and thank you for joining Portfolio Recovery Associates fourth quarter and full-year 2009 earnings call. Speaking to you today will be Steve Fredrickson, our Chairman, President and CEO; Kevin Stevenson, our Chief Financial and Administrative Officer, and Neal Stern, our Chief Operating Officer of Owned Portfolios. We will begin with prepared comments and then follow up with a question-and-answer period. Afterwards, Steve will wrap up the call with some final thoughts.

Before we begin, I'd like everyone to please take note of our Safe Harbor language. Statements on this call which are not historical, including Portfolio Recovery Associates' or managements intentions, hopes, beliefs, expectations, representations, projections, plans or predictions of the future, including with respect to the future portfolio's performance, opportunities, future revenue and earnings growth, future space and staffing requirements, future productivity of collectors, expansion of the RDS, IGS and MuniServices businesses and future contribution of the RDS, IGS and MuniServices businesses to earnings are forward-looking statements.

These forward-looking statements are based upon management's beliefs, assumptions and expectations of the company's future operations and economic performance, taking into account currently available information. These statements are not statements of historical fact. Forward-looking statements involve risks and uncertainties, some of which are not currently known to us.

Actual events or results may differ from those expressed or implied in any such forward-looking statements as a result of various factors, including the risk factors and other risks that are described from time to time in the company's filings with the Securities and Exchange Commission, including but not limited to its annual reports on Form 10-K, its quarterly reports on Form 10-Q, and its current reports on Form 8-K filed with the Securities and Exchange Commission and available through the company's web site which contain a more detailed discussion of the company's business, including risks and uncertainties that may affect future results. Due to such uncertainties and risks, you are cautioned not to place undue reliance on any forward-looking statements, which speak only as of the date hereof.

The company expressly disclaims any obligation or undertaking to release publicly any updates or revisions to any forward-looking statements contained herein to reflect any change in the company's expectations with regard thereto or to reflect any change in events, conditions or circumstances on which any such forward-looking statements are based in whole or in part.

Now, here's Steve Fredrickson, our Chief Executive Officer.

Steve Fredrickson

Thanks, Jim, and thank you all for attending Portfolio Recovery Associates fourth quarter and full-year 2009 earnings call. On today's call I'll begin by covering the company's results broadly. Neal Stern will then talk to you in more detail about our operational strategies and finally Kevin Stevenson will discuss our financial results in detail. After our prepared comments we'll open up the call to Q&A.

Portfolio Recovery Associates concluded a very challenging 2009 on a high note. We produced strong fourth quarter financial results recording our highest net income since the second quarter of 2007 in the face of tepid economic recovery, seasonal weakness in consumer collections and a large allowance charge of $9.5 million. In addition to excellent overall numbers, which I'll detail in the moment, Portfolio Recovery Associates continued to build for the future in the final quarter of 2009.

Our continued ability to access capital in a challenging economy allowed PRA to acquire large amounts of portfolios that we believe are well priced even in a market where collections have grown more difficult. In addition, we were able to sequentially improve both revenue and income at our fee businesses compared with Q3, during which we experienced a notable weakness thanks to our operational strategies, cost containment and some seasonal strength. Taken together, these efforts position PRA to realize strong operating and financial results in the future.

Now on to our fourth quarter numbers. PRA acquired $75.1 million of defaulted debt during the quarter. Cash collections were a record $95.3 million of 20.2% from $79.2 million in the year ago period. These help drive our record cash receipts of $112.5 million in the quarter, up 14.7% from $98.1 million in the same period a year ago. Fee revenue was $17.3 million in the fourth quarter, a decline of 8.7% year-over-year.

Operating expense to cash receipts continued its general trend downward. In the fourth quarter of 2009 the ratio stood 45.4% compared with 47.6% in the fourth quarter of 2008. We continued to tightly control our operating expenses despite the difficult conditions particularly at our fee subsidiaries where expenses are mostly fixed over the short-term.

PRA realized productivity of $145 and $0.44 per hour paid, for full-year 2009 which compares with $131 or $0.29 for full-year 2008. This concludes an increase of 13 net collectors to our company wide owned portfolio call center staff in Q3, 2009 at an increase of 76 from the end of 2008. As I mentioned, PRA recorded another sizable allowance charge in the quarter in the amount of $9.5 million. Kevin will provide details about the charges in a few minutes. Revenue grew 9.3% to a record $73.2 million, compared with the year ago quarter of $67 million despite the charge.

EPS advanced 16% to $0.80 versus $0.69 in the fourth quarter of 2008. Net income of $12.4 million was up 17% from $10.6 million a year ago. In terms of year-over-year comparisons, we booked net interest expense of $2 million in the fourth quarter which was down from $2.9 million in the year ago quarter due to lower interest rates.

In terms of resources, our balance sheet remains strong with ample cash availability to continue building for the future. During the fourth quarter, we slightly increased absolute debt outstanding to $321 million including $1.5 million of long-term financing not associated with our line of credit. This continues the very controlled financial leverage we've employed over the past several years. Our debt-to-equity ratio at quarter end stood at 96%, up just slightly from 95% at year end 2008 while we maintained $46 million of availability under our lines of credit.

Now let's review our operations in detail beginning with fourth quarter portfolio purchases in overall market conditions. During the quarter, we acquired 101 portfolios from 13 different sellers. The majority of about 91% of our fourth quarter purchase volumes in terms of dollars invested was for major credit card asset class.

The remainder came from pools of line of credit, auto and installment loan accounts. The majority of the bankrupt accounts acquired during the quarter are included in the major credit card category. Bankrupt accounts accounted for about 59% of our purchase activity in terms of dollars invested. In Q4, once again the vast majority of our bankruptcy purchases were fresher bankruptcy filings. Remember since we buy the similar IRR's regardless of the age of the account we tend to see slightly higher collections to purchase price multiples from fresh fillings with more delayed cash flows and slightly lower multiples with more mature already cash flow in fillings.

Portfolio pricing firmed slightly during the quarter. The resale market continues to experience little to no volume in terms of offerings. Most competitors with access to reasonable amounts of capital appeared to be exerting a fair amount of discipline. On the past several calls I have talked to you about our view of the political climate for our industry.

Although that topic remains cloudy for many businesses, our included, let me summarize what we see today. First of all the latest stories in the press suggest that the proposed consumer financial protection agency is loosing steam and that instead we will see existing over sized agency step up their activities. As it relates to debt collection and debt purchasing it is likely that the FTC would be their lead regulator.

Whether related to that possibility or not as I am sure many of you have read, during Q1 the FTC begin gathering information about the debt purchase industry. PRA and other large debt purchasers have been sent requests for information about how we go about buying and collecting accounts. We're working closely with the FTC in what we view is an appropriate and intelligent process of gathering facts within the parent focus on debt resale and account record keeping and documentation. Importantly PRA does not resell debt and is not rely on resale as an integral part of our business model.

On the state level we've continued our ongoing dialogs with a number of State Attorney General's offices to foster continued positive working relationships with them. Nevertheless given the current political climate, its reasonable to expect some challenges from regulators and state legislatures. We are proactively dealing with these issues by working diligently both alone and in conjunction with industry groups to help provide perspective and education about our company and industry to these parties.

Moving on to collections, as I motioned earlier, Portfolio Recovery Associates recovered a record $95.3 million in the fourth quarter from owned portfolios, up 20.2% from $79.2 million a year earlier. Each month of the quarter had strong year-over-year growth rates with November and December both much stronger than October.

Offering a bit more detail on our collections performance, call center and other collections were $45.1 million, up 10% from the same quarter last year. Cash collections from our purchased bankrupt accounts were a record $26.9, 59% from Q4 2008. As we have discussed for the past several quarters collections from our internal legal collection strategy in which we use our own staff attorneys or in select cases, use third party attorneys working on a fixed price basis were once again a record at $7.6 million in Q4 2009. It was up 185% from the same quarter last year. We expect continued strong growth in this channel for the foreseeable future.

External legal collections were 16% of total cash collections in Q4 2009 at $15.5 million. This compares with 23% in Q4 2008 at $18.4 million representing a 16% year-over-year decline. We track owned portfolio productivity in terms of recoveries per hour paid, the core metric that measures the average amount of cash each collective brings in. As I said earlier this metric finished at $145.44 for the full year 2009, compared with a $131.29 for full year 2008.

Excluding the effect of trustee-administered purchased bankruptcy collections PRA's productivity for full year 2009 was $113.42 versus $109.82 for the full year 2008. When excluding legal and trustee-administered purchased bankruptcy collections, productivity for full year 2009 was $87.13 per hour paid, versus $75.47 for all of 2008. Neal will give you more color on site specific productivity in a moment.

Company wide at quarter's end, our owned portfolio collector headcount was 1,325, up about 13 from the end of September. As it relates to staffing please remember that a majority of our recent buying has been related to pools of bankrupt accounts which require relatively low levels of staff to handle. Please also note that our bankruptcy staff is not included in the collector head count numbers I just shared with you.

Now lets turn to PRA's fee-for-service businesses and the collateral location skip-tracing and government services arenas. Our fee-for-service businesses saw revenue decline 8.7% from the same period a year earlier to $17.3 million. Still this was a significant 21% improvement from $14.2 million in Q3 2009, aided by seasonal strength.

Although revenue increased at our skip-tracing unit, net operating income fell somewhat from the same period a year ago as we continue to deal with volume and business mix changes from clients. Our increased physical capacity in Las Vegas together with recently signed clients and the development of new product offerings are working to restore growth to the IGF business over the short run. We expect this trend to continue. The government services businesses performance improved from the prior quarter due to the anticipated lift from year end business license processing but it continued to be hurt by declining sales-and-use tax in California driven by the recession.

Although we continue to sign new clients and see strong demand for municipalities given the fiscal pressures many of them face these days, this recession related revenue slowdown from some of our larger clients continues to be disappointing. The sales-and-use tax decline will undoubtedly keep persistent pressure on the government services business for some time.

Before I turn the call over to Kevin Stevenson, PRA's Chief Financial and Administrative Officer, I would like to have Neal Stern, our Chief Operations Officer of the owned portfolio business give you a summary of our operational strategies. Neal?

Neal Stern

Thanks, Steve. During the fourth quarter PRA's operational results reflected the trends we have been discussing with you throughout 2009. The number of people making monthly payments to us has continued to increase significantly. The benefit of this has been offset in the short term by the fact that those payments had smaller average balances reflecting both our increased dialing capacity and the difficult macro economic environment. In Q4, the total number of payments received was up a strong 40% over the prior year. For full year 2009, the number of payments finished 35% higher than 2008.

Clearly, this is not just a reflection of our 2009 purchase activity. More people understand the importance of credit and we have made significant strides in productivity through increase automation and improved analytics. In December, the total number of agent phone calls increased by 16% over the prior year and we were able to much more narrowly target the groups that we felt were the most likely to have the ability to pay.

As I've indicated on prior calls, its my contention that the short term issues related to average payment size which for the call centers in December was down almost 15% over the prior year can be more than overcome provided we are able to keep people on payment plans in an operationally efficient manner.

To this point our fourth quarter call center collections on accounts that we've owned for more than five years finished at $3.7 million and for the full year 2009, that number was $16.5 million, a 50% increase over 2008. Importantly this result was obtained in a tremendously efficient manner. Obviously we could set about increasing the collection to purchased price multiple from any prior year if we focused all of our efforts on accounts purchased in that year. However, our overall productivity and profitability results would suffer as a result.

Our ability to collect on these older accounts in such an efficient manner without undermining productivity or profits speaks directly to the quality of our staff, improvements in dialing and our ability to leverage what I believe is the best going model in the industry. Again let me make our strategy very clear. We do not seek to maximize collection to purchase price multiples. But rather we work to maximize IRR's on invested capital. We feel this is a much more shareholder focused approach.

Our decision to aggressively build out our internal legal program in lieu of farming out work to external law firms was borne out in the fourth quarter by our results. Importantly this internal capability has also allowed us to side step much of the turmoil currently underway as a result of regulatory and bankruptcy proceedings involving some of the largest external firms used by many in the industry.

Our internal legal collections finished the fourth quarter up 185% over prior year and our fourth quarter legal results in total finished 9% ahead of 2008. Our full year legal results ended 7% lower than 2008. Our decision to focus our 2009 efforts on building our internal legal process and refining our external legal efforts clearly positions us to realize more of the healthy bottom line improvements from the fourth quarter in the years to come.

Closing the productivity gap between our collection sites remains at the front of our operational objectives, given the sizable opportunity that gap represents. Had all of our call centers delivered the same cash collections per paid hour as our top site, we would have realized another $7.4 million in collections for the fourth quarter. Although this estimated theoretical value gap was down by almost $1.5 million from Q2, $3 million from Q1 and more than $1 million from Q4 2008 it was $1.5 million worse than in Q3.

During Q4, we saw increased site specific productivity per paid hour of about 10% year-over-year. As a reminder this site specific productivity figure looks only on hourly paid productivity by collection reps. It excludes not only and legal and bankrupt accounts but also any non-collector assigned inbound generated collections or collections coming from external activities such as collection agencies.

Productivity was up year-over-year at every call center location. In Jackson, Tennessee productivity was up 15% year-over-year and down 8% sequentially. Productivity was up 8% year-over-year and down 7% sequentially in Hampton, up 4% year-over-year but down 2% sequentially in Kansas, was up 10% year-over-year but down 11% sequentially in Norfolk and was up 41% year-over-year but down 14% sequentially in Birmingham.

The Philippines office was up 45% year-over-year and up 4% sequentially. On an absolute basis Kansas remained our top call center for the quarter. During the quarter on a relative basis Jackson was about 75% of the Kansas standard, Hampton was 86%, Norfolk was 87% and Birmingham was 52%. Productivity in the Philippines office continued its trend of improving performance at 39% of the Kansas standard.

As a reminder the center tends to receive more accounts that are difficult to collect. Since the Philippines collectors are less expensive to employ, we end up risking less toward these tougher accounts. Because of this change the Philippine center's 39% performance measurement does understate that center's relative capabilities. During the quarter we expanded employment at this office as we began working a segment of our Spanish speaking portfolio from the Philippines.

With that I'll turn the call over to Kevin Stevenson, PRA's Chief Financial and Administrative Officer. Kevin?

Kevin Stevenson

Thank you Neil. Record cash receipts, record cash collections and record revenue. We can talk about all of these in the fourth quarter. I look forward to a future where we can move beyond the larger allowance charges we've been discussing recently and begin to talk about record net income as well. We're not there yet but it's definitely our goal.

Nevertheless PRA did report solid fourth quarter net income of $12.4 million which is an improvement of 17% from $10.6 million a year ago and represents our highest net income since the second quarter of 2007. EPS advanced to $0.80 from $0.69 a year earlier. We achieved this despite incurring $9.5 million in allowance charges in the quarter, which cost us $0.38 in EPS.

For the full year 2009 we incurred $27.6 million in allowance charges, costing us approximately $1.10 in foregone EPS. This compares with reported full year EPS of $2.87. Total revenue for the quarter was $73.2 million which was 9.3% when compared to same period one year ago. Operating income was $22.1, million up 9% from the year earlier period while net interest expense decreased from $2.9 million one year ago to $2 million in Q4.

For full year 2009 revenue was $281.1 million, up 6.8% from 2008. Operating income was $80.6 million, down 5% from $84.8 million in 2008. Full year 2009 net income was $44.3 million, down 2.3% from $45.4 million in 2008. Return on equity improved from Q3 to 15% during the fourth quarter, leaving us at 14.3% for the full year 2009. We consider any ROE under 15% to be unacceptably low and remain very focused on bringing that number back towards our historical 20%.

Our weighted average interest cost on the acquisition line during the quarter was 2.47% and 2.62% for the full year 2009. At quarter end borrowing levels each 100 basis point swing in LIBOR either costs or saves us about $225,000 monthly. Bringing our fourth quarter revenue down into its components, the majority of total revenue or $56 million came from income recognized on receivables. This is revenue generated by owned debt portfolios and our Q4 performance represents the record for PRA.

Income on financial receivables is derived from the $95.3 million in cash collections we recorded during the quarter reduced by an amortization rate including the $9.5 million allowance charge or 41.3%. During the prior four quarters Q3, 2009 to Q4 2008 we incurred the following amortization rates respectively. 41.2%, 40.3%, 42.9% and 39.3%. Our full year 2008 rate was 36.8%.

As I mentioned during the quarter PRA recorded allowance charges totaling $9.5 million, which compares to $8.9 million in Q4 2008. Allowance charges for full year 2009 totaled $27.6 million versus $19.4 million for all of 2008.

Life-to Date reserves since the change to SOP 03-3 now stand at $51.3 million. I would like to continue the approach discussing allowance charges that I initiated on our Q2 call. I will talk about a few of the larger charges but not step through each and every pool. For those interested in additional detail we have included a chart in our press release that details our allowance charges by fiscal quarter, broken down by year of purchase.

I want to remind everyone that we account for revenue from our overall portfolio in a pool by pool basis. When pools under perform as they are more likely to do in a recessionary environment we do not lower their yields. Rather we move relatively swiftly to take allowance charges which show up right away as a revenue reduction on our income statement.

In contrast, when pools over perform that over performance is not reflected right away. Only after there is sustained evidence of over performance where we make an upward adjustment and then we will raise the yield on that pool going forward. This adjustment of an increased yield do not show up on our income statement right away but will only show up in the future and gradually over the pools remaining life.

I believe this bias exists today to a greater extent that we have seen in years. In particular our 2009 purchases have been over performing expectations by a sizable margin. However we feel it is too early to significantly adjust yield and or cash flow expectations for these pools. This conservative implementation of accounting guidelines is currently further compounded by our long standing position against permitting accretion during the first six months of a pools new life.

Instead of allowing accretion, we opt to use either cost recovery or cash method as permitted by the SLP. Accretion or recognizing more revenue than cash collected adds to the net finance receivable amount of a given pool instead of amortizing it, in other words capitalizing revenue. Accretion is a technically acceptable event under the SLP and generally occurs in situations where cash flows are ramping up early in a pools life. Pools with a low forecasted initial cash flow curves coupled with a more robust cash flow projection in later portions of the curve are more apt to experience accretion than pools with a more front end weighted cash flow curve.

Bankruptcy pools with mostly freshly filed chapter 13 accounts are a perfect example of this kind of phenomenon. Although we are not about to change our position on accretion at this time, it did cost us about $5.5 million in delayed revenue in 2009 from a bankruptcy purchase made in 2009 alone. Of course those revenues will be recognized in future periods.

As we said before, given what we believe to be the correct and conservative application of our accounting policies some allowance charges are always going to be with us. As I promised I’ll not step you through each and every deal today. Instead I will just briefly mention the larger reserved portfolio. 2003 and 2004 contributed net reversals as they did for all of 2009.

These tranches released nearly a $1 million of allowances this year. The 2005 to 2007 non-bankruptcy tranches contributed a net charge of $2.4 million, down from a $3.4 million charge in Q3 2009 and down from the Q1 of 2009 charge of $4.2 million but up from the $1.9 million charge in Q2 of 2009. When you review the chart in the press release you will clearly see that approximately 70% of the fourth quarter's net allowance charge came from the 2008 tranche of accounts.

During the prior two quarter the 2008 tranche represented approximately 60% of those respective quarter's net allowance charges. The majority of the accounts in there pools come from several forward flow transaction that were priced in one during 2007 but then we were required to continue to buy throughout 2008.

As I mentioned last quarter in hindsight these portfolios are likely some released profitable purchase that we made in our 14 years in business. As we look more closely the $6.9 million allowance charge from the 2008 tranche we find that the 2008, Q1, Q2 and Q3 non bankrupt portfolios contributed all of the $6.9 million recorded.

Looking back into Q1, Q2 and Q3 of this year, we had incurred $2.1 million, $2.4 million and $4.8 million on these very same deals. We continue to be very focused on these tranches of paper since they now represent 58% of our total full year 2009 allowance charge and we will continue to keep you apprised of their status. Our bankruptcy portfolios are performing nicely and as a group ended with a net allowance charge for the quarter of $280,000.

I mentioned on our Q2 call that we were closely watching our bankrupt portfolios and we're evaluating book deals and deal multiples. I promise to keep you apprised on that front. In Q3 we did indeed allow our bankruptcy portfolio yield to increase but generally not their deal multiples. During Q4 we allowed the yields that we set in Q3 to remain unchanged and again left the deal multiples generally unchanged.

As I mentioned on prior calls, one of our goals has been to be very cautious on increasing yields and deal multiples on bankruptcy pools given the allowances we incurred in 2007 and 2008 on older bankruptcy pools. However, our bankruptcy deals are performing nicely and we've had no significant allowances on bankruptcy pools since that time. The aforementioned changes to yields into a lesser extent deal multiples impacted primarily the 2008 and 2009 bankruptcy deals all of which are performing well relative to expectations.

Moving on, approximately 580,000 of operating expense in Q4 was due to non-cash equity compensation that was booked during the quarter relating to our 2009 performance based restricted share plan as well as other equity based awards. For the full year non-cash equity compensation amounted to $3.8 million or about $0.15 in EPS. During fourth quarter cash collected on fully amortized pools was $7.6 million. During the prior four quarters Q3 2009 to Q4 2008, we recorded cash collections on fully amortized pools respectively in the amounts of $6.6 million, $7.1 million, $5.9 million and $5.1 million.

Referring to fully amortized pools, I mean purchased pools with no remaining bases on our balance sheet this 26% year-over-year, 49% quarter-over-quarter improvement and the continuation of a trend is attributed to numerous recent advances in our scoring and segmentation strategies which is permitting us to more efficiently and effectively uncover individual accounts that are more prone to make payment from our portfolio. It’s a very exciting development especially in the face of the current economic conditions.

Eliminating the fully amortized pools from our amortization calculation gives us an amortization rate for Q4 of 44.6%, up modestly from the 42.0% we saw in the fourth quarter of 2008 but sequentially flat when compared with the 44.3% experienced in Q3 2009. The performance of our government services group did improve in Q4 due to seasonal factors and operating strategies following sequential declines in revenue and income in Q3. Still these performance measures are down from what they could have been due to the continued recession driven decline in sales-and-use tax revenue in the state of California where we derive fees from auditing sales-and-use taxes.

We do have a good pipeline of clients in government services and are working hard to overcome this decline although we anticipate the impact will continue while the economy is slow, keeping a bit of a damper on revenue and income generated by government services. At IGS slightly improved year-over-year revenue did not translate fully to operating income due to our quality mix in client accounts. We've been working hard to address this by streamlining our operating processes without impacting effectiveness as well as working with clients on pricing.

We expect both of these initiatives together with the expansion of our client list and product offerings will help drive a nice 2010 for IGS. Total commissions and fees generated by our fee-for-service businesses were $17.3 million. This compares with $14.2 million in Q3 and $18.9 million in the year ago quarter.

Our fee based businesses accounted for 23.6% of the company’s overall revenue. For the full year commissions and fees were $65.5 million or 23.3% of revenue versus $56.8 million or 21.6% of revenue in 2008. As a reminder our quarterly amortization expense related to acquired intangibles from our various business acquisitions is about $668,000 per quarter.

Operating expenses in Q4 grew 9.5% when compared top Q4 2008. This was primarily driven by compensation and employee services growing $3.4 million or 14.5% and communication expense increasing by $847,000 or 31% primarily as strategically targeted letter campaigns increased. The increasing competition expenses during Q4 relates primarily to the addition of IT employees as we seek to increase project throughput inside legal employees as we continue to build that capability as well as growth in our call center collectors.

Some of these cost increases were partially offset by a decrease in legal and agency costs and fees of 6% or $823,000 as we pulled more legal work in-house. Operating margins during Q4 were 30.2%. Looking back in the prior four quarters Q3 2009 to Q4 208 operating margins were 27.4% in Q3, 29.9% in Q2, 27.1% in Q1 and 30.3% in Q4 2008.

Without the margin dilution caused by the fee businesses, the operating margin would have been about 320 basis points higher at 33.4% in Q4. Without the amortization of intangibles operating margin would have been 31.1% in Q4 2009 versus 31.4% in Q4 2008. Operating expense to cash received as I mentioned before is perhaps a more insightful efficiency ratio since it removes the effect of variations in purchase price, amortization rates as well as allowance charges.

Operating expenses as a function of cash received during Q4 2009 were 45.4%. This was down nicely from 47.6% in Q4 2008 as well as from 46.7% in Q3 2009. For the year, this ratio is 46.2% versus 46.5% in 2008. Our balance sheet remained stronger during the quarter despite substantial purchases of new finance receivable portfolios in the amount of $75.1 million.

As of quarter end the outstanding balance in our line of credit was $319.3 million, up $13 million during the quarter. Our total credit facility is $365 million, leaving us with $45.7 million of availability. Cash balances increased sequentially during the quarter to $20.3 million. We believe our leverage remains quite low and modest at a 96% of equity. We are producing strong internal cash flow and are well capitalized.

To update you on our financing, we believe that funds generated from operations together with existing cash and available borrowings under our credit agreement would be sufficient to prevent our operations, planned capital expenditures as well as our currently committed forward flow transactions and as well as a material amount of additional portfolio producing in excess of those currently committed cash flow amounts I just mentioned.

We remain however very cognizant of the current market fundamentals in the debt purchase market which because of significant sale supply and tight capital availability could cause increased buying opportunities to arise. As a result we have begun working with our bank group on a new expanded syndicated facility.

Although we still have over a year to run on our current committed facility, we would prefer to lock into a larger facility during this period of plentiful buying. In doing so we anticipate similar covenants but increased pricing. Also as a reminder and as mentioned in our prior conference calls, we had filled a $150 million shelf registration on September 30, 2009 in an effort to preserve all of our options relating to our financing alternatives.

We continue to operate all aspects of the business with a long term focus. We feel this is particularly important in today's difficult economic environment as it impacts on our businesses. We view our own portfolios as a long term asset and we do not make collection strategy decisions that favor short term over longer term results. Likewise we continue to invest in all of our businesses so that we can compete from a position of strength regardless of economic conditions.

I would like to close with some final important points. First, as I described in great detail, our revenue recognition methods typically cause us to take allowances quickly when pools underperform while recognizing over performance slowly over a pool's future life. This occurred to a significant degree in the third and fourth quarters impacting our financial results. Second, we have been making significant investments in well priced pools of charge off debt over the past 18 months. Based on our underwriting terms and actual collection trends, we anticipate strong cash production from these pools over the next 24 to 36 months.

Third we have recently been very successful in improving our already strong account scoring and segmentation analytics as well as our collection processes. We believe these will continue paying dividends in the form of improved operating ratios. Fourth, relating to the prior point and also related to the payment phenomenon that was described by Neal, we are modestly bullish on the longer terms tales of even some of the older portfolios but have yet to have the comfort to increase the EOC expectations which could lead to higher future yields.

Finally, our bankruptcy business has now achieved a level of underwriting expertise and operational sale that we feel will allow it to produce significant growth in cash collections and income contributions over the next several years. With that I've completed my prepared comments and I’d like to open the call up to Q&A. Steve, Neal and I will be available to answer your questions. Operator?

Question-and-Answer Session

Operator

(Operator Instructions). Your first question comes from the line of Mark Hughes with SunTrust.

Mark Hughes - SunTrust

Kevin, you talked about the accretion issue on BK, you said $5.5 million for the full year, was that affect greater in the fourth quarter than it was in the third quarter or less?

Kevin Stevenson

I want to say it was greater then the fourth, but I can get that in a second.

Mark Hughes - SunTrust

What was your cash from operations for the quarter for full year?

Kevin Stevenson

See the cash flow from the press release numbers

Mark Hughes - SunTrust

Yes maybe I didn’t see in the press release.

Kevin Stevenson

Yes, it’s in the press release.

Mark Hughes - SunTrust

No I was talking cash from operations of the cash flow statements.

Kevin Stevenson

Net cash provided by operating activities was 285

Operator

Your next question comes from the line of David Scharf with JMP Securities.

David Scharf - JMP Securities

Steve I want to ask you little bit about how we are going to think about the supply and pricing environment. I am cognizant of your bullish comments and by all indications, it should be a very positive year for supply. There are some anecdotes out there of some credit granters maybe pulling back a little bit from sales of fresh charge-offs, working more in house. Is that purely kind of one off anecdotal evidence, on the whole is that something we are to be concerned about that perhaps we don’t have as much so called desperate sellers or by all accounts are you seeing this for shaping up this to a very, very big volume here.

Steve Fredrickson

Well, I think there is a little bit of both going on, there is an awful lot of charge-off paper in the market. There is a record amount of charge-off paper that’s being created and I think it’s just reasonable that as the credit issuers try to maximize their collections on those portfolios that still there agency pipelines as well as use the debt sale markets.

So, actually long term I see the use of agencies is very positive for our markets, I think that it implies that we are going to have pretty substantial portfolios for sale for some time to come. Eventually, those pools will be liquidated to whatever their strategic end is and though we sold out at some point in time and at that point they become portfolio to folks like us. So I certainly didn’t mean to imply that all of this charge-off is occurring, it’s hitting the fore sale market, that’s definitely not the case. It’s also filling agency pipelines as well.

David Scharf - JMP Securities

You actually pre-empted my next question, which was the sort of a dynamic between agency and debt buying. I was just curious, a comment about the progression throughout the quarter. I think you had mentioned November and December. We are stronger than October and was that in part just by more BKs that were liquidating quicker sort of flowing into the stream or is that in more broad comment about the overall productivity and collection patterns.

Steve Fredrickson

I think that from our perspective, we also had some year-over-year day comparison differences, but we had very similar looking November and December as it related to kind of year-over-year growth and October was a bit behind those two months. So I don’t know that there is a whole lot to read into that, the months content to flow in to each other fairly, easily and it’s tough to dice our operations that tightly

David Scharf - JMP Securities

Lastly can you just refresh my memory, the percentage of the fee for service businesses that's represented by sort of the sales in used tax business, how much of it is coming from that?

Steve Fredrickson

I don’t think we have ever broken that out specifically, I don’t know how to parse it for you. It's enough to move the needle, but it's not a significant part of what's going on there. We just had in the third quarter, there was a substantial drop off in that particular part of things and just because of the magnitude of the move, it influenced our overall fee income, but generally it's not the lion share of what we do.

Operator

Your next question comes from the line of Bob Napoli with Piper Jaffray.

Bob Napoli - Piper Jaffray

A question on the operating leverage in the business. So, I think it was a pretty significant move this quarter and operating expenses as the percentage of cash collections and I know you have been looking for that benefit from the bankruptcy business, is this kind of just the start of starting to see those margins improve?

Steve Fredrickson

Yes, we would hope that this is a long-term trend that is going to be evident over the next couple of years. I don’t know that we will necessarily be able to observe a smooth trend quarter-to-quarter just because of a lot of other things that are going on, but again because of the volume of bankruptcy volume that we have been doing and how the expenses flow there as well as we like to thank the efficiencies that we have been bringing to the charge off or core that bind business. We think we are going to see some continued push on that margin downward.

Bob Napoli - Piper Jaffray

Is there any feel you can give for the operating expenses for the bankruptcy business as a percentage of cash collection that would may be help us a little bit in modeling that?

Steve Fredrickson

Yes, I don’t really have something to share at this point on that one, Bob.

Bob Napoli - Piper Jaffray

How much of the forward flow from 2008 that you said is the least profitable business that you’ve probably ever written in your history how much of that is less than the impairment charge that you took this quarter, do you feel like you now got it, but I know there’s always going to be impairments, but are we turning to corner, how much of that workflow is left?

Steve Fredrickson

So you ask specifically about those flow deals, remember they were part of the charge-off debt buying groups, so they are aggregated with everything else. So if you kind of think about 2008 Q1, Q2 and Q3 there is going to be some percentage of that flow in that quarter’s aggregated deal, but also it’s going to have a big percentage of spot deals that are actually performing pretty well and they all kind of mushed in that particular quarter. So I can’t ask how much is left. So I can’t tell you how much is left in the books specifically to those deals because they are not accounted for that way. As far as allowances I will have to kind of say what I was say is that we are trying to take these allowances as they are dealt to us and deal with looking at the curve fitting and we have to see how Q1 shakes out in Q2 and move our way through 2010.

Bob Napoli - Piper Jaffray

Did you stop buying there was none of that in the fourth quarter of 2008 and did it slow to a trickle in the third quarter, maybe some feel like that, there seems to be the kind of the key here to getting those impairments down to a much lower level and obviously driving up earnings pretty substantial.

Steve Fredrickson

The volumes were coming down throughout the year and obviously at this point anything that we are still in has been long since repriced or were out.

Bob Napoli - Piper Jaffray

Okay and then, last question just on your funding. Would you expect get something done in the first half of this year and in the market today what would we expect like LIBOR 400, something like that on the pricing?

Kevin Stevenson

Your question is anticipated pricing on the bank line?

Bob Napoli - Piper Jaffray

Yes. On the bank line and when do you think expect to renew the line?

Kevin Stevenson

We are in the early stages of that process, so I would certainly hope that we would be done first half of the year. As for pricing, it’s going to be where the market clears, I don’t have a term sheet in hand at this point. So, I don’t have that answer for you.

Bob Napoli - Piper Jaffray

Okay. But clearly rates will go up and you’ll get a larger line most likely to go along with it?

Kevin Stevenson

That’s the goal. The goal is to get a larger line, not the same size, that it wouldn’t be a good move and hopefully deploy that towards highly yielding assets.

Operator

Your next comes from the line of Edward Hemmelgarn with Shaker Investments.

Edward Hemmelgarn - Shaker Investments

Your bankruptcy purchases obviously are going to be, the majority of purchases are certainly recently this year, you have talked about that you are buying earlier paper, when do you think on average that bankruptcy paper starts to collect relative to when you talked about in the past. Is it two years, three years or what?

Steve Fredrickson

I If you look back in 2009, the average life, the average age of piece of paper we bought in bankruptcy arena was about 5 months and prior to that we are up in 14 to 15 months range, so you can see we have got at least 10 months delta between when those things were filed versus when we bought them and so what you are going to see is that there are some cash flows in there. So don’t take it zero either. The problem as I mentioned on the accretion point since we don’t allow accretion, there is not enough cash to start amortizing that pull down, so we limit the revenue to the amount of cash received, so little bit of time there into the accretion commentary. So generally we take something like 10 months, 12 months maybe even up to 18 months for those things to start flowing very heavily from the time of filing.

Edward Hemmelgarn - Shaker Investments

Then like when do you think they will start to in terms of curve, when would you expect to start to reach a peak of collections because the curves certainly look different now than the ones you were buying back in '05 to '06, those timeframe.

Steve Fredrickson

Typically, they are going to peak between 18 and 36 months and a typical plan could continue out for 5 years. So again, the other thing you got to keep in mind is we are not buying exclusively fresh filings, there is a mix in here. And so depending exactly kind of what the mix is with each quarter you are going to see slightly different cash flow dynamics and timing dynamics.

Edward Hemmelgarn - Shaker Investments

True, but I guess what I was just trying to bring this up because by purchasing a lot more bankruptcy, now you are changing the shape of your profitability impacts relative to what it used to be, you used to start collecting a lot upfront, in non-bankruptcy and now. So you got some of your best profitability early on. Now you are looking at given the fact that your expenses are upfront, your profits are later, you are kind of like pushing it out. You just have a different profitability curve than historically?

Steve Fredrickson

That’s exactly right and I think that you hit the nail on the head when you brought up not only the cash flow and revenue elongated or delayed from what we would typically see, but the expenses are much more frontend loaded and so there’s definitely a negative impact there as we ramp up buying bankrupt assets versus deploying the same amount of capital to purchase core assets.

Edward Hemmelgarn - Shaker Investments

You really stepped to bankruptcies, is it more that the pricing is better on the bankruptcy or is it more just you’ve got, you feel so much better in your analysis and how well you can process it?

Steve Fredrickson

Well, we tried to be very active in both parts of the market and to some degree it’s just how the deals have come down just how the business come down.

Operator

Your next question comes from the line of Bill Carcache with Macquarie Research.

Bill Carcache - Macquarie Research

Steve, you mentioned that in the fee for service businesses that some of the challenges relating to sales and used tax concerns that you guys talked about last quarter, that you expect those to persist as we look out into the rest of the year. But we had a nice increase here sequentially, and I know that the fourth quarter is seasonally stronger. But is it fair to say that you're kind of thinking about commissions over the course of the year is kind of being flat on a year-over-year basis, over the next few quarters or are you thinking that they're going to be lower? Can you just give us a little bit of guidance there in terms of how to think about that?

Steve Fredrickson

Well it relates to specifically the sales in used tax fees. I think if one just keeps an eye on generally the Californian economy, you are going to get some kind of feel for how we are going to do on that specific sales and used tax piece of things and I think things are kind of bouncing along there as opposed to necessarily spiraling downward. Some of the things that I had been reading recently suggested that the coastal areas were starting to get some legs although inland of the economy was still tough.

You are starting to see again the coastal areas get some recovery. The rest of our fee for service businesses are on an upward trajectory. As we have been talking, we have been continuing to sign new clients. I think we’ve got some real solid things happening, both in other aspects of the government services businesses and in the IGS skip tracing business. So, hopefully we’ll keep some upward pressure on fee income there as the year goes on.

Bill Carcache - Macquarie Research

Kevin, there are a few things going on with the potential for the bank line and the change to the debt side of the balance sheet and then the possibility that under the shelf registration if an opportunity presents itself you guys may use that. Can you kind of just give us a sense of how to think about the optimal capital structure, regardless of how all of that shakes out. I think you said you're at 96% debt-to-equity now. A couple of quarters ago you guys said that you have the capacity to go up to, I believe it was 130%. What’s the optimal capital structure regardless of how these, what size the bank line gets increased to, and whether there’s any kind of offering under the shelf.

Kevin Stevenson

Yes I think optimal is a big word, but we do think about a lot. So just to sort of recount what you said, we are working towards those goals, we are at about 96% ratio at this point. I think in the past calls, Steve and I have talked about the concept that 2 to 1 ratio would kind of be outward, we would feel some pressure internally, just about where that’s out, but clearly a lot of companies run higher debt to equity ratios than those, but for right now I don’t think we’ll be approaching the kind of ratios that make us uncomfortable at all.

Bill Carcache - Macquarie Research

Okay and if you had to have an open line of available capacity, you currently are at I believe you said $46 million or so, how high will that be, not to say that’s what you would get from the banks but what a range where we feel comfortable with available capacity?

Steve Fredrickson

Well I think right now what we are looking for is to have available capacity you think as we see the deals that we think we just need to purchase so all I can tell you is that we are going to go after a line that’s materially larger than one we have.

Bill Carcache - Macquarie Research

Do you have a review on whether tax refunds are going to be up year-over-year in the first quarter?

Kevin Stevenson

We don’t know yet

Bill Carcache - Macquarie Research

Okay and then last question is the forward flows that can you talk just about any that you may have entered into that you are currently in now and when those were priced, just any perspective on that?

Steve Fredrickson

Sure in the normal course we are generally going in and out of forward flow arrangements on a pretty regular basis, I will tell you that both sellers and buyer tended to shorten up flows during 2009 and there were a lot of you know even 3 months flows that we could kind of bounce in and out of, so at this point I would say the flows that we are in tend to be on the shorter side but they continue to be a important part of the debt purchase market certainly.

Kevin Stevenson

If I could reach here for Mark use the earlier more queues that are earlier question you'd ask about the impact of accretion on Q4 versus Q3 and I don’t have any exact reconciliation for remark but I can tell you that I think that the impact in Q4 was lower than it was in Q3 was somewhat lower than it was in Q3. Okay? Next caller.

Operator

Your next question comes from the line of Rick Shane with Jefferies.

Rick Shane - Jefferies

Thanks guys for taking my question, I realize that it's getting late out there, I will try to be pretty quick. One of the trends that we have seen over the last couple of years if I would look back nine of the last 10 quarters you have seen year-over-year increases impairments. There was also been fairly consistent commentary along the way that the purchase environment is getting better.

You maintain your discipline your there was some time since last year you are still bidding on the number of yield et cetera and clearly something has changed because the impairments continue to come through fairly substantial levels I think that a lot of folks thought that we probably returning to quarter after Q3 and a little bit surprise by the Q4 impairment number. The silver lining here to me is that ordinarily in Q4, over the last several years to started to impair the current years or the most recent years advantages. It's only a modest impairment but at least for the 2009 vintage we didn’t see that impairment starting to come through.

So, perhaps the trajectory is different there. That leads to sort of two parts to my question one, do you really think that the 2009 vintage now that we have seen it seasoned for on a weighted average basis for about six months is going to substantially outperform the '08, the '07, and the '06s and at the same time do you think that what happened to the industry in which changed the collectability and influenced these outcomes is some of behavioral shift do you think we have seen a

The outcomes is some sort of behavioral shift do you think we have seen a moral decline in the obligation of pay debt based on things like media effect because everybody sitting here saying hearing they may remodify their mortgage you can pay off your credit card debt pennies on the dollar do you think that’s actually starting to hurt you business?

Steve Fredrickson

Well first of all as that relates to how does '09 work versus especially 07, 08 I think just looking at our multiples we would suggest that we think '09 is going to be healthier tranche than no as others no doubt about that we are in the business of buying charged off and bankrupt that and so we have always doubt with at this adversely selected customers to be their don’t want to pay or cant pay their obligations I don’t know within that population like we feel is though we have seen any moral, is that what you want to call it as it relates to peoples desire to repay I think the biggest that we have seen in this very much impacted the assumptions the original under writing assumptions that we had made during the years and which you correctly pointed out we have been struggling with some of these allowance charges but we have really seen the sub prime market or the consumer refinance market really go away people are rolling there credit card balances over from card to card anymore people don’t have the ability to take out a second or a third mortgage to refinance their trouble debts anymore, people aren’t rolling from house to house like they had been and its all impacting our larger payments.

Our larger payments have almost fallen to nothing as it relates to the mortgage revise base, they had historically never been huge but they had bounced around say 4%, 5%, 6% of our total payments, total cash received and they have gone to nothing and at the same time our average payment sizes come down and again we feel like we are seeing really more people inclined to pay, its just a matter of what they are able to pay. And since they are relying really only on their cash flow from wage and salary you have seen those payment sizes come down are settlements and our payments in full have dropped dramatically and we have to make it up by getting more payment. So, actually with anything the overall population of our customers seems more inclined to repay their debts, its just they are doing so in small advice.

Rick Shane - Jefferies

Got it. And guys thank you, I always ask very point of questions on the call and I always really appreciate your patients in the questions on the call and I always really appreciate your patients you answering them. Thank you.

Steve Fredrickson

No problem. And if I can also add, if you think about the curve, remember we are dealing with this accounting process as it appears 3-3 or ASP 3-10-30 it is now this called. The curve said really the situation where if that cash does commit even higher in the long term you can end up in the allowance in the current period, so its just the nature of the accounting and I would highly recommend people also look at the deal multiples when the case gets filed and you will get a feel for what those tranches are really doing in terms of where they started and where there are at currently?

Neal Stern

Now, I will pile on because I can help myself but I mentioned in my script we had 40% increase year-over-year in the number of payments received in Q4 that to me is a fairly impressive improvement and as I said in my script I think people understand the importance of credit and we have got more effective and so I see nothing portraying the sentiment that you described.

Operator

Your next question comes from the line of Hugh Miller with Sidoti & Company.

Hugh Miller - Sidoti & Company

Thanks so much for taking my questions. I know its been long call, I just had a couple that weren’t asked and just wanted to get a better feel of the bankruptcy process if you had a second year. Was wondering historically can you just give us a sense of what the fall out rate is for consumers going through the bankruptcy process that you guys have kind of seen?

Steve Fredrickson

It would vary, but it wouldn’t be unusual for that number to be high, it could be in the 40% to 50% range.

Hugh Miller - Sidoti & Company

Okay and when that does happen, can you give us a sense of the consumer repayment patterns that you have seen with those types of customers relative to some of that you buy there would be a traditional receivable repayment, it tend to be better worse about the same?

Steve Fredrickson

Well I think its one of the benefits of having in an integrated shop where we do bankruptcy work along with normal collections works. So when those people fall out we quickly get them over to the other side of the house. Once they are there though and once they are a kind of normal customer, the propensity to pay relative to just the average charge off customer would be higher than a typical customer.

Kevin Stevenson

I want to make sure clear on that you, that number if a plus or minus will stay to a pricing what when price those bankruptcy deals we expect a certain fallout. So if you pick the 40% that Steve used as example, these things are priced you expect the 40% fall out so that’s all part of the deal and if that number goes to 30, its probably better for us when we go to 50 or 60 we need to kind of a Neal to give us some cash from the collections.

Hugh Miller - Sidoti & Company

Yeah, I can clearly understand that I just want to get a sense of that type of figure on relative basis because a lot of you peers are going out there in the bankruptcy market and they are not collecting for themselves, they have a different option with that type. So, I guess the way that you are able to price that is a little bit different in the way they have been looking that type of business correct?

Kevin Stevenson

Yeah, that’s right.

Hugh Miller - Sidoti & Company

Okay and then I guess assigned from that ability relative to some of those who are there bankruptcy buyers where you are integrated shop, are there any other things that you guys see things that you guy see as a competitive advantage because obviously most of that stuff is then being collected for use, you are not using leveraging the other call center and the abilities you have there but any other competitive advantage you can see with that business?

Steve Fredrickson

Well, I think that the other significant competitive advantage one can develop is just the ability to very accurately process these things at the lowest possible price. You don’t want to miss filings to do so can be very expensive especially when you are dealing with a lot of numbers and if you have a couple of miss percentages here and there it can definitely affect your cash flow and then whether you can do it at x% or x-1% the lower your operating cost they are the better and more your systems are the more competitive you can be and obviously the more profit you can bring to the bottom line at any given purchase point.

Neal Stern

And I would just add so it helps us analytically as well so there are charge-off accounts that go bankrupt and fly from my side to the other side of the houses well and so having account obviously helps us model that event to a better degree.

Hugh Miller - Sidoti & Company

And certainly it will take an appreciate to inside dept and the very last question I had was at regards to and I know you guys have said in the past that you kind don’t practice the kitchen sink method with regards to impairments but just I can guess one of the give us any sense of given the other strong performance in the fourth quarter with the bankruptcy improvement and so forth and would you say that you maybe little bit more aggressive then you are normally would have with the ’08 vintage?

Kevin Stevenson

Yeah I don’t there are any more aggressive I think we are pretty tight in terms of how we look at the allowances so I think that you look at the percentage coming from 08 being 70% this quarter it was the loud side compared to the prior ones but again I think that the process itself was pretty tight and pretty consistent.

Hugh Miller - Sidoti & Company

Okay, thanks so much I appreciate that

Operator

Your next question comes from the line of Sameer Gokhale with KBW.

Sameer Gokhale - KBW

Hi thank you. If you are going to refresh my memory that will be great I think maybe your last two quarters about this but how should we think about may be a drop in unemployment and be benefit that you might see on your productivity metrics I mean unemployment as its been rising you guys have been showing improvements in productivity because changes you made our operation and if unemployment falls it suggest that you should see some sort of lift there in your productivity metric and I was wondering how you think about maybe a potential offset being decrease in unemployment accompanied by reductions and settlements to more people or few people going into the upfront settlement, you guys collecting more overtime as you pursue collecting is that an offset or how should we think about there, how do you think about that internally?

Neal Stern

So at the highest level I would just reiterate a point that Steve made earlier and that is we buy a subset of the population that’s always been fairly troubled. Unemployment is not new to the folks that we are buying. So, it doesn’t impact us quite as much as it might normally otherwise impact someone else doing recovery work. However this recession was clearly different and it did impact us and as we have described in most sizable impact was this decrease in the average payment size. I do think there is some correlation to unemployment and now recovery figures and I would expect that if unemployment improves that we would improve in someway as well.

Sameer Gokhale - KBW

It doesn’t seem like you specifically think that there is any sort of statistical correlation that you have drawn at least that you can share with us today?

Neal Stern

There is definitely a correlation, I’m just saying it’s not quite a strong as you might imagine given it’s a lot of the accounts that we buy haven’t made a payment in two years so there employment of than to me if in quite some time ago.

Sameer Gokhale - KBW

Okay and then, there seem to be more opportunities for you guys to buy the charged off paper and you are trying to negotiate an increase in your credit facility, perhaps an anticipation of that or maybe looking for opportunities but few quarters to go I think you would try bid for a mortgage servicing business which wasn’t from what I understand that large of an acquisition but as you think about making acquisition are you looking at things outside of your traditional debt of portfolio purchasing business at this point in time, are then specific things were looking at.

Steve Fredrickson

There is nothing specifically targeted in terms of a business that we want to get in, I would say that our strong desire as we look at potential fee businesses, it would be a way from kind of the typical core collection business as suppose to a part of it and we continue to have our eyes open for interesting little businesses that we think we can help out from a process technology capital marketing perspective. But are generally related to what we do processing payments dealing with call centers that sort of thing.

Sameer Gokhale - KBW

Okay, that’s helpful and congratulations on a god quarter again.

Operator

Ladies and gentlemen this concludes your question-and-answer session. I’d now like to hand the call over to Mr. Steve Fredrickson for closing remarks.

Steve Fredrickson

Thank you operator. I8’d like reiterate a few key points about our fourth quarter performance before concluding the call. Portfolio recovery associates concluded a very challenging 2009 on a high note. We produce strong fourth quarter financial results in fact reporting our highest net income since the second quarter of 2007 in the phase of a tepid economic recovery season of weakness in consumer collections and large allowance charge of $9.5 million.

In addition to the excellent overall numbers, portfolio recovery associates continue to build for the future in the final quarter of 2009. Overall, we have entered 2010 a stronger and more efficient competitor reiterating what I said on our third quarter call, I am excited about PRA's future today as I have been in years. I would like to thank all of you for participating in our conference call. We look forward to speaking with you next quarter.

Operator

Thank you for participation in today's conference. This concludes your presentation and you may now disconnect. Have a great day.

Copyright policy: All transcripts on this site are the copyright of Seeking Alpha. However, we view them as an important resource for bloggers and journalists, and are excited to contribute to the democratization of financial information on the Internet. (Until now investors have had to pay thousands of dollars in subscription fees for transcripts.) So our reproduction policy is as follows: You may quote up to 400 words of any transcript on the condition that you attribute the transcript to Seeking Alpha and either link to the original transcript or to www.SeekingAlpha.com. All other use is prohibited.

THE INFORMATION CONTAINED HERE IS A TEXTUAL REPRESENTATION OF THE APPLICABLE COMPANY'S CONFERENCE CALL, CONFERENCE PRESENTATION OR OTHER AUDIO PRESENTATION, AND WHILE EFFORTS ARE MADE TO PROVIDE AN ACCURATE TRANSCRIPTION, THERE MAY BE MATERIAL ERRORS, OMISSIONS, OR INACCURACIES IN THE REPORTING OF THE SUBSTANCE OF THE AUDIO PRESENTATIONS. IN NO WAY DOES SEEKING ALPHA ASSUME ANY RESPONSIBILITY FOR ANY INVESTMENT OR OTHER DECISIONS MADE BASED UPON THE INFORMATION PROVIDED ON THIS WEB SITE OR IN ANY TRANSCRIPT. USERS ARE ADVISED TO REVIEW THE APPLICABLE COMPANY'S AUDIO PRESENTATION ITSELF AND THE APPLICABLE COMPANY'S SEC FILINGS BEFORE MAKING ANY INVESTMENT OR OTHER DECISIONS.